A lawyer, banker, and stockbroker walk into a bar—more on that in a moment.
Home sellers have the advantage when there’s a home shortage. Home sellers price their homes high when housing inventory is low. That leaves home buyers to choose from only a few high-priced homes for sale. We need more housing inventory which will lead to more reasonable home prices.
Now back to the opening sentence! Were you expecting to see the ending to be a joke? Sorry to disappoint you, although there is probably a funny ending out there somewhere. I have a question instead. What do a law firm, banking headquarters, and the New York Stock Exchange have in common? Empty office buildings that can solve the housing crisis.
More housing inventory leads to more reasonably priced homes.
As a result of the pandemic, a large percentage of workers have left office buildings to work from home. High office vacancy rates and a need for housing have led many cities to renovate unused office buildings.
Converting office buildings into apartments for sale and rent is helping to help fill the demand for more housing.
Large cities, like Houston and Dallas-Forth Worth, Texas, have some of the highest office vacancy rates. Cities like Chicago, New York, and Los Angeles have had the most significant declines in office occupancy since the second quarter of 2020. Unsurprisingly, these cities are working hard to convert unused office buildings into desirable living spaces.
It’s estimated that if office-to-housing conversions were to happen in cities with large declines in office occupancy, thousands of apartments and condos would be available for sale or rent. For example, if Chicago converted 25% of vacant Class B* and Class C* office buildings into housing units, nearly 5,700 housing units would be available; almost 7,500 units in New York and 4,200 units in Los Angeles.
NAR Research Group looked at case studies of office-to-housing conversions and found some fantastic examples of success stories. In Maryland, a 1964 8-story building was successfully repurposed into 102, 1- and 2-bedroom condominiums. These high-efficiency units were converted into housing to attract first-time home buyers. Rent in the 3rd quarter of 2021 was approximately $1,960/month.
Another office-to-housing conversion took place in Washington, D.C. The transformation created 198 units, with 20 designated as affordable housing. Rent in the 3rd quarter of 2021 was approximately $1,960/month.
Many of these housing units, from office conversions, are mixed-use, meaning they might include affordable units, luxury units, and a small number of retail spaces for restaurants or grocery stores. Most of these converted buildings are conveniently located near public transportation too.
So, if you’re looking for an apartment or house to buy, consider housing created from vacant business buildings. Renovated office buildings turned into housing could be a major factor in providing more housing for first-time home buyers and anyone looking to buy a home.
*Class B property is more utilitarian than a higher-end Class A building, is around 20 years old, and in adequate condition. Class C property is older than Class B (30+ years old), in fair to poor condition, and may not be in the most desirable locations.
Find more tips on home buying in Reazo's comprehensive home buyer's guide (you'll want to bookmark it for future reference).